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                                  EXHIBIT 10.16

                                T.B. WOOD'S, INC.
                              EMPLOYMENT AGREEMENT


         This Employment Agreement dated as of April 14, 1998, (the "Employment
Agreement") by and between T.B. Wood's, Inc. a Delaware corporation, with its
principal offices and place of business in Chambersburg, PA (the "Employer") and
Michael L. Hurt (the "Executive").

         WHEREAS Employer wishes to employ Executive in a full time capacity as
President ___ and Executive wishes to accept such employment subject to the
terms and conditions set forth in this Agreement;


         NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto each hereby agree to all the terms and conditions of
this Employment Agreement as follows:

1.       Compensation and Benefits
         -------------------------
    
A.   Employer agrees to pay the Executive a salary of no less than $265,000
annually for the term of this Agreement, subject to the conditions set forth
elsewhere in this Agreement. Notwithstanding the foregoing the parties may
mutually adjust Executive's compensation without breaching or invalidating this
Employment Agreement. The compensation due hereunder shall be payable on a
semi-monthly basis.

B.   The Executive shall be eligible to and shall participate in any bonus or
incentive compensation plans in which said Executive is participating on the
date hereof and which are hereafter maintained by the Employer for its executive
employees.

C.   The Executive shall be eligible to and shall participate in all employee
benefit plans or programs of the Employer in which said Executive is
participating on the date hereof and which are hereafter maintained by the
Employer for its executive employees. Moreover, the Executive shall be entitled
to reimbursement for reasonable travel and other expenses in accordance with the
Employer's policies in effect, as amended from time to time, for its executive
employees.

D.   Nothing contained in Section 1.B. or 1.C. of this Employment Agreement 
shall require or be interpreted to require Employer to establish, maintain, or
continue any bonus or incentive compensation plan, or any other employee benefit
plan or program.

E.   Executive's participation in any bonus or executive compensation plan or 
any employee benefit plan or program shall be subject to the terms and
conditions of such plan or program as they may be amended from time to time.

F.   Executive understands and agrees that he shall not be entitled to any other
compensation in addition to that provided under this agreement by reason of a
change of ownership or control of the Employer, unless specifically set forth in
another written agreement signed by Employer.

G.   Executive understands and agrees that except as expressly provided herein,
compensation for services hereunder is contingent on Executive's performance of
the obligations contained in this Employment Agreement. Therefore, except as
otherwise expressly agreed by the Employer and the Executive in writing, if
Executive terminates this Employment Agreement or his performance is not in
compliance with his obligations hereunder, Employer will have no further
obligation under this Agreement to provide any compensation or benefits beyond
Executive's last day of active employment. Provided, however, that if any of the
following shall occur, the Executive may, at said Executive's option, leave the
employment of the Employer, and the Employer agrees to pay the Executive
$350,000 per annum for a period of two years after Executive's last day of
active employment.

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          (1) a reduction by the Employer, without the Executive's consent, in 
     the Executive's salary or other fixed compensation below that compensation
     expressly set forth in Section 1.A. hereof;

          (2) the failure of the Employer to offer Executive the opportunity to
     participate in any bonus or incentive compensation plan, or other employee
     benefit plan or program established and maintained by Employer for its
     executive employees in which the Executive is a participant on the date
     hereof, or for which he shall subsequently become eligible, if Employer
     establishes, maintains or continues (as the case may be) such plan or
     program for its other executive employees.

          (3) a significant reduction in the position or status of the Executive
     or a significant change in the location of the Executive's principal office
     after the date hereof without the Executive's consent.


     The Executive shall be deemed to have consented to any of the conditions 
described in Section 1.G.(1), 1.G.(2) or 1.G.(3) above unless the Executive 
shall object thereto in writing and resign his employment within 90 days after 
receiving written notice thereof.

H.   If the Employer decides it no longer needs the services of the Executive
before the expiration of this Employment Agreement and prior to, but not in
anticipation of, a transaction other than a public sale of the Company's common
stock in which more than 50% of the Company's common stock is sold to parties
other than current shareholders or affiliates of current shareholders (a "Change
of Control Transaction"), the Employer agrees to pay the Executive the
compensation provided under Section 1.A. of this Employment Agreement for
twenty-four months after Executive's last day of active employment. However, if
the Executive should subsequently enter into Competition with the Employer as
described in Section 8 below, then no further payments shall be due to the
Executive under this Employment Agreement after the date of the Executive having
so entered into Competition with the Employer. If after a Change of Control
Transaction the Employer decides it no longer needs the services of the
Executive before the expiration of this Employment Agreement, the Employer
agrees to pay the Executive $350,000 per annum for a period of two years after
Executive's last day of active employment.

2.   Duties.  
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     The Executive will continue to be the President or other senior executive 
officer of the Employer and shall discharge the duties of such office(s) to the
best of the Executive's ability and in accordance with the Employer's by-laws.
The Executive shall continue to perform faithfully and diligently the foregoing
duties on a full-time basis, consistent with the Employer's practices prior to
the date hereof: (a) devoting the Executive's entire working time, ability, and
attention to the business of the Employer; and (b) performing such other duties
as shall be commensurate with the above stated executive capacity as President
as the Employer shall from time to time specify.

3.   Term of this Employment Agreement and Termination.
     --------------------------------------------------

A.   The term of this Employment Agreement shall be from the date signed by the
parties and ending on December 31, 2002.

B.   At any time that Good Cause (as defined below) exists or has arisen, the
Employer may, at its election, terminate this Employment Agreement by so
notifying the Executive in writing (the "Good Cause Notice") and 30 days after
the giving of the Good Cause Notice, the Employer shall thereupon be released
from its obligation to make the payments or provide the benefits described in
Sections 1.A., 1.B., and 1.C. hereof from and after the effective date of such
termination. For purposes of this Employment Agreement "Good Cause" shall mean
the existence or occurrence of any of the following:

          (1) conviction of the Executive for a felony;

          (2) the occurrence of material loss or damage to the Employer as a 
     result of the Executive's commission of any act or acts of theft, larceny, 
     embezzlement, fraud, dishonesty, illegality, or moral turpitude as 
     determined in good faith by the board of directors of the Employer, whose 
     determination shall be final and binding;

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          (3) any other material breach of any provisions of this Employment 
     Agreement which the Executive fails to cure within 10 days of the 
     Executive's receipt of written notice thereof;

          (4) the death of the Executive;

          (5) material disability of the Executive to such an extent that the 
     Executive is precluded from performing the duties set forth in the 
     Employment Agreement for a period of 180 days in the aggregate during any 
     one-year period, provided that if the Executive becomes materially disabled
     as a result of alcohol or substance abuse, such period shall not extend 
     beyond 10 days; or

          (6) gross insubordination or gross and willful violation of Employer's
     policies.

4.   Confidentially. The Executive hereby acknowledges that the Employer has 
made available to the Executive certain customer lists, product design
information, performance standards, and other confidential and/or proprietary
information owned by or licensed to the Employer, including without limitation
sensitive financial information, trade secrets, and proprietary designs
("Confidential Information"). Executive agrees that he will not use or disclose
any trade secret that he may have acquired during his employment with the
Employer so long as it remains a trade secret, and that for a period of two
years after the date that this Employment Agreement is terminated for any
reason, he will not use or disclose any other Confidential Information that he
may have acquired during his employment with Employer. The rights of the
Employer as a result of these agreements are in addition to the rights of the
Employer under common law or applicable statutes for the protection of trade
secrets or confidential information.

5.   Specific Remedy. If the Executive commits a material breach of any of the
provisions of Section 4, the Employer shall have, in addition to the other
remedies provided by law, the right and remedy to have such provisions
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Employer and that money damages will not provide an
adequate remedy to the Employer.

6.   Representations and Warranties. The Executive represents and warrants that
entry into or continued performance of the Employment Agreement has neither
caused nor required, nor will it cause or require, the Executive to breach any
obligation to, or agreement or confidence with, any other person.

7.   Business Opportunities. During the term of the Employment Agreement, if the
Executive (or if to the knowledge of the Executive any agent, employee, officer,
or independent contractor of or retained by the Executive) becomes aware of any
project, investment, venture, business, or other opportunity (any of the
preceding, an "Opportunity") that is similar to, competitive with, related to,
or in the same field as the Employer, or any project, investment, venture, or
business of the Employer, then the Executive shall use good-faith efforts to
cause the Employer to have the opportunity to invest in, participate in, or
otherwise become affiliated with such Opportunity. Executive shall not make any
such Opportunity available to himself or any member of his immediate family
without first requesting and receiving the written permission of the Employer.

8.   Competition. During the term of the Employment Agreement, the Executive 
shall not, without the written permission of the Employer, own an interest in,
operate or participate in, or be connected as an officer, director, employee,
agent, independent contractor, partner, or principal with any business entity or
person producing, designing, providing, or soliciting orders for, or selling,
distributing, or marketing products, goods, equipment, and/or services which
compete with the Employer's products, goods, equipment, and/or services (any
such activities being in "Competition" with the Employer). In the event this
Employment Agreement is terminated by Executive, Executive agrees that he shall,
for a period of two years after the date of termination, refrain from acting as
an executive or providing any management or other advisory services to or for
any business or portion of a business for which belted drives, couplings, AC
inverters and drives, and any other product lines Employer acquires after the
date of this Agreement, but before Executive terminates his employment by
Employer, collectively account for more than twenty-five percent of the revenues
of such business or portion of a business.


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     Executive agrees that his services are unique and extraordinary and of
such a character that the loss of such services would cause irreparable injury
to the Employer. Executive further agrees that the restrictions contained herein
are reasonable, and that they do not restrict him any more than is reasonably
necessary to protect the legitimate business interests of the Employer.

     Executive agrees that he will not take any customer lists of the Employer 
after leaving his employ and that he will, for so long as he is employed
hereunder and for a period of two (2) years following termination of his
employment, refrain from soliciting or accepting, or attempting to solicit or
accept directly or by assisting others, any business from any of the Employer's
customers, including actively sought prospective customers, with whom Executive
had material contact during his employment for purposes of providing products or
services that are competitive with those provided by the Employer.

9.   Modification and Prior Understandings.
     --------------------------------------
A.   This Employment Agreement may not be modified except by a contract in 
writing executed by the party(ies) thereto against whom enforcement of such
modification is sought. The Employment Agreement is intended as a final and
complete expression of the agreement of Employer and Executive with respect to
such terms as are included in this Employment Agreement and supersedes all
negotiations, stipulations, understandings, agreements, representations, and
warranties, if any, with respect to the subject matter hereof or thereof.

B.   This Employment Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors, heirs and assigns. No rights or
obligations of the Executive under the Employment Agreement may be assigned or
transferred by the Executive other than rights to compensation and benefits
thereunder, which may be transferred by will or operation of law, subject to the
limitations of the Employment Agreement.

C.   Any notices required or permitted to be given under the Employment 
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or delivered by courier, or delivered by certified or
registered mail sent postage prepaid, return receipt requested, duly addressed
to the party concerned at the address indicated below or to such changed address
as such party may subsequently by similar process give notice of:


     If to the Employer:

     T.B. Wood's, Inc.
     440 North Fifth Avenue
     Chambersburg, PA  17201
     If to the Executive:

                  Michael L. Hurt
                  58 Cornertown Road
                  Chambersburg, PA  17201


D.   In the event of the Executive's death or a judicial determination of the
Executive's incompetence, reference in the Employment Agreement to the Executive
shall be deemed, where appropriate, to refer to the Executive's estate or other
legal representative.

E.   Any controversy or dispute arising out of or relating to the Employment
Agreement which is not voluntarily settled by the parties shall be submitted to
and settled by arbitration in Pennsylvania, in accordance with the rules then
obtaining of the American Arbitration Association. The prevailing party in any
such arbitration proceeding shall be entitled to recover from the losing party
its reasonable expenses for attorneys' fees and disbursements paid or incurred
by or on behalf of the prevailing party. Both Executive and Employer hereby
waive any right to a trial by jury for settling any dispute that arises from
this agreement.

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10.  Expenses. Upon submission of proper vouchers, the Employer will pay or
reimburse the Executive for all transportation, hotel, and living expenses
incurred by the Executive on business trips outside the Chambersburg, PA area or
any area to which such Executive may have been relocated by the Employer and for
all other business and entertainment expenses reasonably incurred by the
Executive in connection with the business of the Employer during the term of the
Executive's active service hereunder, all in accordance with the reasonable
Employer policies in effect on the date hereof and/or from time to time during
the term of this Employment Agreement.

11.  Indemnification. Employer shall have an obligation to indemnify Executive 
in the event of any claims or litigation made against Executive as a result of
his activities within the scope of his employment only to the extent permitted
or required by Employer's bylaws and applicable insurance policies, if any, to
the extent permitted by Delaware law.

12.  Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of Pennsylvania, but not including the choice of law
provisions thereof.

TB WOOD'S, INC.



By:/s/ Thomas C. Foley                               /s/ Michael L. Hurt
                                                         EXECUTIVE